Everyone is very happy about the unemployment data. Groovygirl awaits the revision next year 🙂

The financial talking head today said that the “real stat” could be lower (at least he said it), but it doesn’t matter. Buy stocks and sell gold……is the mantra of the day. This could go on for a while.

Groovygirl is keeping an eye on that 30 year bond. It’s been flirting relentlessly with 4%. Many, many private and public loans (including commercial real estate) that need to be rolled over in the next 3 years are based on that number. Higher rates could turn a profitable investment into a bankrupt investment in one day. The Fed has spent the last 5 years and many billions keeping that rate down for the last roll-over from 2009-2012. That was only buying time, nothing else.

This rate moving higher will also effect the residential housing market.

If you are looking at a 10-year plan for an investment, real estate investment, or company assume this rate goes up. Make sure the forecasted profit will work (or not go negative) in an environment with an interest rate of 6, 8, or even 10%.

3. Since the only endgames to ballooning debts and declining household incomes are runaway inflation or renunciation of debt, the Status Quo has only one choice left to preserve its neofeudal arrangement: do more of what has failed spectacularly, i.e. inflate more asset bubbles as a way to mask the system’s phantom collateral for a few more months or perhaps years.

Unfortunately for central banks and their politico cronies, serial asset bubbles face the headwinds of diminishing returns. All the Fed and Federal agencies had to do to launch the first housing bubble was lower interest rates and encourage subprime mortgages.

Take a look at that Case-Shiller House Price Chart, can you say unsustainable? The Fed is purchasing billions in mortgages each month and the US government is insuring any and all new mortgages and it is still a basic flat line. Spending lots of money just to stay in place….unsustainable.

And take a look at that stock market chart, adjusted for CPI (which is the lowest inflation indicator), stocks have not rebounded. But you would never guess that from listening to the financial talking heads. With this chart in mind, there is still movement up for stock prices, but just keep in mind that is up just to get where you were in 2007. And look at the scary volatility in the stock market since 2007. Bumpy ride.

But the scariest chart, the one that will ensure an economic depression for the next 20 years (whether that is a deflationary depression or a hyperinflationary depression or both, one after the other). It is the spread between real income and real expenses and the widening of that gap that will keep the US in a depressive economic situation for years to come.That spread can happen in a deflation or hyperinflation, same outcome for Main Street. And Main Street, the consumer, is 70% of GDP.

That increasing spread will make sure more defaulted consumer and mortgage debt, lower GDP, and more bail outs and bail-ins for entities holding that debt. Add to this an aging population those income naturally declines after retirement.

April 11, 2013

groovygirl often talks about percentages. Such as don’t worry about the dollar amount of the investment allocation, but the percentage. Most people look at their 401k statement or broker statement and see if their actual dollars have gone down or up from the last statement. This is a good bird’s eye view and something everyone can relate to.

However, there is another key investment lesson about percentages to be aware of. It is something that talking financial TV heads use.

Let’s say a stock or stock index has gone down 30% over a year’s time. Let’s say you own $100 of that index. And let’s say you sell at the end of the year and your dollar loss is $30, 30% of $100. The stock is now at $70. You decide to buy the next year at $70. And during the next year the stock has a 30% gain. You sell and take your gain, which is 30% or $21. The stock is now at $91.

If you look at percentages, 30% down and then 30% up over a 2-year period, you may be fooled at first glance that you have gained back your losses. But you have not, you have lost $9 or almost 10% of your original $100 investment. We all listen to stock market percentages of gains and losses and so keep in mind this phenomenon.

Side musing: this happens all the time. The summary at the end of the news cast is DOW is down 3% today and then the next day it is up 3%. That is an actual loss, not a break-even, over a 2-day period. Train your mind to know that is a loss.

Try the math on the opposite scenario: you gain 30% on a $100 investment, but lose 30% right after that? Is it an over-all gain or loss? How much?

What about a 30% gain one day and another 30% gain the next? Is the gain 60%? Nope, what is it? And what about a loss of 30% one day and another loss 30% the next, is the loss 60% of the original investment, nope….

Hint: only one scenario yields a gain to the original investment, all others are losses to some extent. Even though the percentage up and down stays the same.

On a deeper level, depending on tax rates on the investment for the loss year or the gain year, you may be losing more money (or gaining, but doesn’t seem to be heading in that direction). Depending on the purchasing power or value of the under-lying currency, you may find that the gain or loss would buy you more or less than at the beginning of the investment.

Many things to consider when investing, and even more importantly, when to sell.

February 20, 2013

Click here for a Washington Post article where they examine what the financial talking head forecasters said 4 years ago, what really happened, and what they are saying now.

Amazingly, this exact same reaction happened in the Great Depression of the 1930’s. Forecasters would claim back then that “prosperity was just around the corner”. That’s where the phase originated.

The nation would turn the corner next spring, in the fall, etc. Same things we have heard since 2009…..

Great joke in the opening scene of the 1936 film My Man Godfrey, view entire movie here:

After Mike, a “forgotten man” (homeless and unemployed guy), has described how a policeman was interfering with Mike’s latest business venture and how the government should get out-of-the-way of honest men making a living instead of requiring all the government “relief” (welfare).

Godfrey: Mike, I wouldn’t worry about it, prosperity is just around the corner.

Mike: Been there a long time, which I knew which corner.

Any of this sound familiar? The slang has changed, but not the system and not the outcome.

We are in a Depression and we are not coming out anytime soon. Not until the debt system load crashes to a sustainable level based on the value of the underlying assets. And all the talking heads are not going to change that truth. They can only distract the sheeple from the truth and keep them unprepared and vulnerable.

The Western banks will be taken down, not by regulators or government, but by class action lawsuits for the next 30 years.

The LIBOR Rate scandal is one of the biggest, effecting basically the financial system world-wide. Practically every public and private contract is based off the LIBOR rate. Businesses, banks, and investors were cheated out of a huge amount of money. HUGE.

This makes MF Global look like Corzine swiped a tip from a sidewalk cafe table when no one was looking.

And just got more interesting, 20 more banks around the globe in on the LIBOR scam. Click here. And Barclays claim that officials in the British government endorsed this crime. And that makes the whole thing better….how?

gg predicts China will create an integrated interest rate system for the entire Eastern portion of the globe (to go with their reserve fund, global trading currency, SWIFT, and gold exchange) in three, two, one…..

China doesn’t have to do anything. Just create alternative global financial systems, and eventually, every global investor will beat a path to their door. Not because it is so much better, but because it is predictable and the only other games in town (New York and London) are so blatantly stupid and greedy. It is not rocket-science, the sun is setting on the West.

Click here for Jesse’s comments on the recent brief discussion of rigged markets on CNBC…..Whalen’s conclusion: everybody knows markets are rigged. They do? And we wonder why money is literally fleeing the West? Congratulations, the financial TV talking heads have moved with lighting speed from denial to acceptance. Unbelievable. Who even listens to these people anymore?

More capital controls will keep money from flying to Asia. Better move it now.

Side musing: gg also predicts that those with smaller amounts of money will invest locally (slow money style), where they can keep a direct eye on their money. groovygirl has not taken this leap yet, but is studying it carefully. It is one of the possibilities of investment for long-term or short-term investments after selling gold/silver.

Bank of America is imploding, must be taken over and divided now, if not sooner.

it is AIG which takes down the financial system for the second time after its lawsuit against BAC filed last night kills Bank of America.

Citi doesn’t look good either.

Groovygirl thought August was the “off-season” for the markets. There is no vacation in a global debt implosion. It’s still ugly out there. Groovygirl woke up this morning, so excited as gold was well over $1700. Then she got a laugh for the day watching the financial talking heads explain why the S&P has no idea what they are doing.

All the financial producers got their very clear marching orders yesterday from the powers that be. And they are spinning it anyway they can today. Not 24 months ago, they were blaming S&P for not downgrading mortgage securities when they should have. Now they are chastening them for downgrading US debt (when it is clearly unsustainable). If you are going to blame S&P for all the ills in the market, let’s try to be consistent about it. Shall we?

The funniest exchange was when they talked about the downgrade and how it was completely unfounded because the US can just print more money to pay its debt. This is, of course, a ridiculous statement, but it gets better. Then in the very next take, some expert talks about a falling dollar resulting from that move. And the MSM host says wait a minute, S&P downgraded the US debt , not the dollar. What the hell do they think is going to happen to the USdollar, if the only option is to print more money?

July 18, 2011

In case you haven’t heard, since all Murdoch US news publications and TV have blacked out the story…including the WSJ; there is a huge phone hacking scandal going on in England. First, two top Murdoch directors have been arrested and resigned last week, then two heads of Scotland Yard have resigned today. News of the World closed its doors. Now, the whistle-blower is found dead? Can’t make this stuff up, click here.

Can’t wait until this moves to Murdoch’s US holdings or “brain room”….this FOX producer should be careful, apparently whistle blowers wind up dead. More former employees talk about Black Ops at HQ, click here. Is Murdoch running a global news organization or Blackwater?

Early January we were in a recovery. Now, the whole world is going to hell in a hand basket. Chaos is the word of the day.

A few things that groovygirl is watching closely:

MERS has stepped out of the legal battle, US real estate is frozen again at any price. Blogs seems to be only one acknowledging the reality of this long-term real estate decline. Martin Armstrong is right. Update: just heard that 30% of home sales last quarter were foreclosures and 30% were cash sales, so that’s 30% that might actually have had a mortgage. Any guess on how many of those mortgages were directly from the US government? The housing market is dead because no one can get a loan, so it doesn’t matter how low the price is.

Canadian and Australian (probably Chinese too) real estate markets are the next to fall. That fall will have the same effect as the US market fall.

Major regime changes and uncertainty in the Middle East. Oil is going up, this will dampen every “recovery” on the globe, especially in the US. US Military has expanded their military presence in the Middle East significantly. Update: it is being reported on zerohedge that there are 10,000 dead in Libya amid protests. And Geithner says not to worry about rising oil prices because the economy is better and banks know how to handle these things. Does anyone screen this man’s statements to the press?

Every major country (besides the US) wants another global reserve currency. It is only a matter of time. The USDollar is dead.

The tone in the US has changed and now all MSM (not just FOX) is picking up on it and running with it. Denial is changing to disillusionment and anger.

Silver market is under a lot of pressure, running in cycles higher as options expire each month. The next four months in silver are going to be insanely bullish. Gold seems to be following suit. There is no physical silver in the market.

More military responses and preparations from US authorities. (Threat of National Guard in WI teacher protest, now US and Canada will use each others military for civil unrest national emergencies.) Mexico is still out of control. If any country needs a National Guard to go help with chaos, it’s Mexico.

Americans are getting killed around the globe. The world is clearly not enthralled with us anymore. Pirates kill 4 US citizens on captured yacht in Indian Ocean, US journalists mauled in Egyptian revolt, and Mexico drug gangs clearing targeting foreign visitors.

Secret independent contractor for the CIA is under arrest for double murder, who was originally a “diplomat”. But real story is he killed two Pakistani agents (not robbers) and he has information on him that proves he is helping Taliban in Pakistan. This is a major set back in the Afghanistan conflict.

All sorts of cover-ups revealed are making people distrust government…oil spill, debt, Iraq War, bank bailouts, anthrax mailings, etc, and this is just in the US. Election 2012 should be very interesting.

Europe is under heavy economic pressure, with weekend meetings and all nighters. EU is printing money and bailing out countries and big banks again. The last week has been really interesting. Next up, regime changes in Europe where Germany and France say no to more bailouts of weak European nations on their dime. Italy under major financial pressure with Libya’s revolt.

The word hyperinflation is actually being uttered in MSM. And everyone is acknowledging that the US has inflation in prices.

Bank runs in several countries who can’t print their own bailout money.

US States are bankrupt. The next question is….will they default, cut all pensions or will the Fed bail them out? There is no good answer to that question.

December 17, 2010

Groovygirl was listening to NPR this morning. Sometimes their guests make these blanket statements that are not challenged.

So, groovygirl got her panties in a bundle about this one.

They were discussing Ron Paul’s new appointment and his views on the Fed and going back to a gold standard for money. In the course of this interview with an author, not Ron Paul, the author stated that we shouldn’t go back to a gold standard because being on the gold standard is what caused the last Great Depression.

No, no, no, no, no…….it is this kind of stuff that drives gg batty.

Although groovygirl is not sure going back on the gold standard is a good idea right now, people still believe the fiat money system. She gets really upset when people flat-out propagate wrong information, especially in the media.

It takes possible solutions off the table without discussion by that deadly and quick viper…bad information.

The United States went off the gold standard because it was the quick option to the global currency crisis that was putting extreme pressure on the US Dollar. This global currency crisis was caused by unsustainable DEBT, mainly stemming from WWI, not the gold standard.

Going off the gold standard, which happened in 1934, six years in to the Great Depression, helped to continue that Great Depression until after WWII. Going off the gold standard was a reaction, a perceived solution, to the debt collapse and currency crisis.

The gold standard was putting in check the massive global debt (as any good monetary system should do). The gold standard told the world, you have too much debt, you can not repay it, you need to change the way you do things right now and default and start over.

Going off the gold standard was a political solution that fooled no one. It simply took away the gauge of how bad things really were. It is like someone looking at the thermostat and complaining that it is too hot in the house, so they take down the thermostat. Now they can’t adjust the temp (rein in debt) and they can’t tell how hot it really is (how bad things really are).

Today, there is a perceived notion by Mr. Ben (and others) that devaluing the USDollar (today’s version of going off the gold standard, since we are already off it) will help (along with other policies) elevate the debt deflation crisis. It will only extend the time of the pain, nothing else, just like it did during the 1930’s.

Take a look at this post via zerohedge. Headline reads that the US has incurred $4.4 trillion dollars in new debt since the financial crisis began. Creating more debt, doesn’t solve a debt sustainability or debt saturation crisis. Halting new debt and resetting old debt to within the limits that the current production economy can service it, that solves debt deflation problems. We are quickly moving in the wrong direction, this will not end well.

Important article from Dr. Gary North. Click here. This is a must read.

Groovygirl’s comment:

If the establishment understands the major issues that need to be addressed before 2015, why are they not addressing them? Are they planning something behind closed doors? Are they arguing amongst themselves? Are they hoping it will all fall apart when the other party is in power, so they may be reelected? It will be too late then. The voters are cluing in very fast that this financial crisis is to be blamed on both parties. Are they in denial that this is not a massive fiscal crisis but the falling of the American Empire? The voters certainly are. Are they all going to retire before 2015, so they will not be caught in the crossfire?

And what about the military complex, are they going to give up their power and control so easily? Stand by and have their budget cut? Last time someone cut their budget, they ran arms and drugs out of central America to fund their operations. It is groovygirl’s humble opinion, we have no reason to believe they are not still working that system to some extent.

Quote from Dr. North’s post:

These two Establishment spokesmen see what is coming. The American empire is about to sink in a sea of red ink. The debt-driven economic cataclysm is going to hit. The empire will be crowded out, along with economic growth.

The welfare-warfare state is going to become the welfare state. Then it will go bust. Long before it goes bust, the voters will decide not to fund the military-industrial complex’s lucrative game plan. When push comes to shove, the voters will shove the American empire away from the trough. This will end the dreams and schemes of the faceless experts who have quietly directed the ship of state ever since 1921. Their gravy train will come to an end.

This could not happen to a more deserving bunch of people.

Side musing: it is this continued lack of transparency and acknowledgment of reality that scares groovygirl. What happens when the interest due on outstanding Treasury Bonds outpaces the US ability to sell more bonds? What happens if foreign holders of current bonds call in their investment all at once? (That’s called financial warfare, and the US will lose.) That’s when your social security, pension fund, 401k, and IRA will be in jeopardy. Do not think for a minute that the US will not pull an Argentina and move all the retirement savings in this country into Treasury Bonds before the dollar collapses for good. This move will be billed as “protecting or securing your retirement”.